What’s Wrong with our Supplier Relationships?

supplier relationships

Are some of your suppliers not behaving as you would like?

Do you get the feeling that they may just not like you or your firm?

It’s likely to be nothing personal, but how you treat your suppliers at an organisational level can have a big impact on their motivation to go the extra mile.

Firstly, it’s good to remember that you are likely to be one of a number of clients your supplier has – maybe hundreds or even thousands.  Getting focus – for the right reasons – can be difficult and takes time to foster. Having unreasonable expectations on the basis of, well, the customer is always right and treating the supplier poorly because that’s what they’re paid for will not get the best outcomes for your organisation.

What causes many of the issues we face in business relationships and how do we solve them?

Money

Quite often the relationship is doomed from the very start.  The buyer is looking to get the best deal (lowest cost) for their firm, the sales lead the best deal (highest revenue) for theirs.

You may go through a lengthy tender process where both parties learn more about the opportunity, but, being a competitive process, the sales team wants to come away with something rather than nothing – perhaps by compromising on quality to get to the target cost.

Now – despite having the a great bid team, can they afford to put their best team on the delivery? Probably not. Can they afford to generate satisfaction through giving away extras? No. Do they need to generate additional revenue to make up for the tight margins on the account? Yes. Therefore from day one there can be a lack of alignment and tension in the relationship.

Behaviours

If you do set out on the wrong foot, it can be difficult to get back on track.  A lack of clarity on requirements, misaligned expectations and turnover of personnel can cause contention – every issue will be amplified, viewed through the lens of the contract. Executive meetings, which should be a forum to develop the relationship can turn into a slanging match or be missed altogether.

Trying to solve issues which can be business impacting can see the customer trying to take more control on how the services are delivered to try and get delivery back on track. The supplier may try to standardise processes to reduce cost and complexity and get the account back on track. Payments are held, things can spiral out of control until an exit plan is formed and a new supplier is chosen when the cycle begins again ad nauseam.

This is a pretty extreme example – but you may have seen some of these issues in your supplier relationships.

How can you fix this:

Focus and invest in supplier relationships – developing a function that looks at supplier relationships on a strategic, proactive basis, not just reviewing operational / delivery is vital. Understand more about your supplier, what they are doing in your organisation, what’s happening in their market and their objectives and strategy.

Work together in partnership – by partnering you can create something that is greater than the sum of its parts.  Through a commitment to innovation and collaboration you make the relationship interesting and valuable to both parties.  This ensures that you get access to the right people and greater investment in time and energy from your supplier.

Strategic Alignment – it’s much easier when you are going in the same direction! Exec conversations are more straightforward when you can talk longer term about how the partnership will develop over a number of years.

Open communication – as far as possible you should be sharing as much information you can – only through this can you have an understanding of what each other wants to achieve and what the blockers are.  There needs to be trust for this, and a good relationship to start with. Good communication channels at all levels of the respective organisations is vital to building and maintaining good relations between the supplier and customer.

Good governance – holding suppliers to account in the right way is important. Early flagging of issues and agreeing a plan to resolve can help smooth problems before they become relationship damaging.  Regular meetings – minuted and with actions tracked – with frank and open discussion are vital for both parties.  This should be an opportunity for both parties to air concerns and agree an approach to resolve and should be unemotional and based on fact.

Better visibility on supplier activity – a supplier visibility tool can give you a view over what procurement activity is in progress, alongside relevant supplier news, spend data and financial information. This can help to ensure that your team are fully briefed ahead of supplier meetings and calls – helping you ask the right questions with the facts at your fingertips. One such tool is our Projectview software, which collates all activity with the supplier and provides everything you need at a glance to save time ahead of supplier meetings.

For help and advice on improving your supplier relationships please do not hesitate to get in touch with us at: info@acadatech.com

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>